[Congressional Record Volume 164, Number 117 (Thursday, July 12, 2018)]
[Senate]
[Pages S4952-S4953]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. DURBIN (for himself, Ms. Smith, Mr. Reed, Ms. Baldwin, Mr.
Brown, and Mr. Cardin):
S. 3205. A bill to amend the Truth in Lending Act and the Higher
Education Act of 1965 to require certain creditors to obtain
certifications from institutions of higher education, and for other
purposes; to the Committee on Health, Education, Labor, and Pensions.
Mr. DURBIN. Mr. President, I ask unanimous consent that the text of
the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 3205
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Know Before You Owe Private
Education Loan Act of 2018''.
SEC. 2. AMENDMENTS TO THE TRUTH IN LENDING ACT.
(a) In General.--Section 128(e) of the Truth in Lending Act
(15 U.S.C. 1638(e)) is amended--
(1) by striking paragraph (3) and inserting the following:
``(3) Institutional certification required.--
``(A) In general.--Except as provided in subparagraph (B),
before a creditor may issue any funds with respect to an
extension of credit described in this subsection, the
creditor shall obtain from the relevant institution of higher
education where such loan is to be used for a student, such
institution's certification of--
``(i) the enrollment status of the student;
``(ii) the student's cost of attendance at the institution
as determined by the institution under part F of title IV of
the Higher Education Act of 1965; and
``(iii) the difference between--
``(I) such cost of attendance; and
``(II) the student's estimated financial assistance,
including such assistance received under title IV of the
Higher Education Act of 1965 and other financial assistance
known to the institution, as applicable.
``(B) Exception.--Notwithstanding subparagraph (A), a
creditor may issue funds with respect to an extension of
credit described in this subsection without obtaining from
the relevant institution of higher education such
institution's certification if such institution fails to
provide within 15 business days of the creditor's request for
such certification--
``(i) the requested certification; or
``(ii) notification that the institution has received the
request for certification and will need additional time to
comply with the certification request.
``(C) Loans disbursed without certification.--If a creditor
issues funds without obtaining a certification, as described
in subparagraph (B), such creditor shall report the issuance
of such funds in a manner determined by the Director of the
Consumer Financial Protection Bureau.'';
(2) by redesignating paragraphs (9), (10), and (11) as
paragraphs (10), (11), and (12), respectively; and
(3) by inserting after paragraph (8) the following:
``(9) Provision of information.--
``(A) Provision of information to students.--
``(i) Loan statement.--A creditor that issues any funds
with respect to an extension of credit described in this
subsection shall send loan statements, where such loan is to
be used for a student, to borrowers of such funds not less
than once every 3 months during the time that such student is
enrolled at an institution of higher education.
``(ii) Contents of loan statement.--Each statement
described in clause (i) shall--
``(I) report the borrower's total remaining debt to the
creditor, including accrued but unpaid interest and
capitalized interest;
``(II) report any debt increases since the last statement;
and
``(III) list the current interest rate for each loan.
``(B) Notification of loans disbursed without
certification.--On or before the date a creditor issues any
funds with respect to an extension of credit described in
this subsection, the creditor shall notify the relevant
institution of higher education, in writing, of the amount of
the extension of credit and the student on whose behalf
credit is extended. The form of such written notification
shall be subject to the regulations of the Bureau.
``(C) Annual report.--A creditor that issues funds with
respect to an extension of credit described in this
subsection shall prepare and submit an annual report to the
Bureau containing the required information about private
student loans to be determined by the Bureau, in consultation
with the Secretary of Education.''.
(b) Definition of Private Education Loan.--Section
140(a)(8)(A) of the Truth in Lending Act (15 U.S.C.
1650(a)(8)(A)) is amended--
(1) by redesignating clause (ii) as clause (iii);
(2) in clause (i), by striking ``and'' after the semicolon;
and
(3) by adding after clause (i) the following:
``(ii) is not made, insured, or guaranteed under title VII
or title VIII of the Public Health Service Act (42 U.S.C. 292
et seq. and 296 et seq.); and''.
(c) Regulations.--Not later than 365 days after the date of
enactment of this Act, the Consumer Financial Protection
Bureau shall issue regulations in final form to implement
paragraphs (3) and (9) of section 128(e) of the Truth in
Lending Act (15 U.S.C. 1638(e)), as amended by subsection
(a). Such regulations shall become effective not later than 6
months after their date of issuance.
SEC. 3. AMENDMENT TO THE HIGHER EDUCATION ACT OF 1965.
(a) Amendment to the Higher Education Act of 1965.--Section
487(a) of the Higher Education Act of 1965 (20 U.S.C.
1094(a)) is amended by striking paragraph (28) and inserting
the following:
``(28)(A) The institution shall--
``(i) upon the request of a private educational lender,
acting in connection with an application initiated by a
borrower for a private education loan in accordance with
section 128(e)(3) of the Truth in Lending Act, provide
certification to such private educational lender--
``(I) that the student who initiated the application for
the private education loan, or on whose behalf the
application was initiated, is enrolled or is scheduled to
enroll at the institution;
``(II) of such student's cost of attendance at the
institution as determined under part F of this title; and
``(III) of the difference between--
``(aa) the cost of attendance at the institution; and
``(bb) the student's estimated financial assistance
received under this title and other assistance known to the
institution, as applicable; and
``(ii) provide the certification described in clause (i),
or notify the creditor that the institution has received the
request for certification and will need additional time to
comply with the certification request--
[[Page S4953]]
``(I) within 15 business days of receipt of such
certification request; and
``(II) only after the institution has completed the
activities described in subparagraph (B).
``(B) The institution shall, upon receipt of a
certification request described in subparagraph (A)(i), and
prior to providing such certification--
``(i) determine whether the student who initiated the
application for the private education loan, or on whose
behalf the application was initiated, has applied for and
exhausted the Federal financial assistance available to such
student under this title and inform the student accordingly;
and
``(ii) provide the borrower whose loan application has
prompted the certification request by a private education
lender, as described in subparagraph (A)(i), with the
following information and disclosures:
``(I) The amount of additional Federal student assistance
for which the borrower is eligible and the advantages of
Federal loans under this title, including disclosure of the
fixed interest rates, deferments, flexible repayment options,
loan forgiveness programs, and additional protections, and
the higher student loan limits for dependent students whose
parents are not eligible for a Federal Direct PLUS Loan.
``(II) The borrower's ability to select a private
educational lender of the borrower's choice.
``(III) The impact of a proposed private education loan on
the borrower's potential eligibility for other financial
assistance, including Federal financial assistance under this
title.
``(IV) The borrower's right to accept or reject a private
education loan within the 30-day period following a private
educational lender's approval of a borrower's application and
about a borrower's 3-day right to cancel period.
``(C) For purposes of this paragraph, the terms `private
educational lender' and `private education loan' have the
meanings given such terms in section 140 of the Truth in
Lending Act (15 U.S.C. 1650).''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the effective date of the regulations
described in section 2(c).
SEC. 4. REPORT.
Not later than 24 months after the issuance of regulations
under section 2(c), the Director of the Consumer Financial
Protection Bureau and the Secretary of Education shall
jointly submit to Congress a report on the compliance of
institutions of higher education and private educational
lenders with section 128(e)(3) of the Truth in Lending Act
(15 U.S.C. 1638(e)), as amended by section 2, and section
487(a)(28) of the Higher Education Act of 1965 (20 U.S.C.
1094(a)), as amended by section 3. Such report shall include
information about the degree to which specific institutions
utilize certifications in effectively encouraging the
exhaustion of Federal student loan eligibility and lowering
student private education loan debt.
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